In this episode, we talked about retail and consumer goods with a focus on eCommerce and the fast-paced change the industry is seeing with our guests, Chief Commerce Strategy Officer at Publicis Jason Goldberg, and Principal Industry Lead for Retail & CPG at Microsoft Sahir Anand.
In this episode, we talked about retail and consumer goods with a focus on eCommerce and the fast-paced change the industry is seeing with our guests, Chief Commerce Strategy Officer at Publicis Jason Goldberg, and Principal Industry Lead for Retail & CPG at Microsoft Sahir Anand.
We talk about Microsoft’s retail and consumer goods strategies, interesting technologies or trends in retail right now, the urgency for businesses to change investment priorities considering the pandemic and the strain it has put on them, and new delivery models such as last-mile home delivery and the implications for retailers.
Episode Links
Guests
Jason Goldberg is Chief Commerce Strategy Officer at Publicis. He was voted one of retail’s top global influencers by Vend four years in a row, and in 2017 he was inducted into the National Retail Federation’s “The List” of people shaping the future of retail.
Jason has a podcast of his own, the retail-focused Jason and Scot show. The home for the podcast is jasonandscot.com and it’s the top-rated iTunes podcast for eCommerce.
Follow Jason on Twitter or LinkedIn. Check out his blog at retailgeek.com.
Sahir Anand is the Principal Industry Lead for Retail & CPG at Microsoft.
In his 20-year career, Sahir has focused on building experience and expertise within retail and consumer goods industries and now works with the Cloud & AI Industry Experiences team at Microsoft.
Follow Sahir on LinkedIn.
Hosts
Paul Maher is General Manager of the Industry Experiences Team at Microsoft. Follow him on LinkedIn and Twitter.
David Starr is a Principal Azure Solutions Architect in the Industry Experiences Team at Microsoft. Follow him on LinkedIn and Twitter.
David Starr:
Welcome to the Azure for Industry podcast. We're your hosts, David Starr and Paul Maher. In this podcast, you’ll hear from thought leaders across various industries, discussing technology trends and innovation sharing how Azure is helping transform business. You'll also hear directly from Microsoft thought leaders on how our products and services are meeting the industry’s continually evolving needs.
All right, listeners, in this episode, we're talking retail and consumer goods with a focus on e-commerce and really fast-paced change that we're seeing in the retail industry, and with us here for that discussion is Jason Goldberg.
Jason is Chief Commerce Strategy Officer at Publicis. He was voted one of retail’s top global influencers by Vend four years in a row, and in 2017 he was inducted into the National Retail Federation’s “The List” of people shaping the future of retail.
Welcome to the show, Jason. It’s great to have you.
Jason Goldberg:
Oh my gosh. Thanks so much for having me. It's great to be with you guys.
David Starr:
Now, I want to point out before we even get started, that Jason has a podcast himself and that is the retail focus show, the Jason & Scot Show and the home for this podcast is jasonscot.com and I want to point out that there's only one T, right?
Jason Goldberg:
Scot’s parents spelled his name wrong, exactly. So there's only one T in Scot.
David Starr:
So jasonscot.com, one T, and it's the top-rated iTunes podcast for e-commerce, very cool.
So with that, we'll also introduce Sahir Anand who is joining us today.
Sahir is the Principal Industry Lead for Retail & CPG at Microsoft. In his 20-year career, Sahir has focused on building experience and expertise within retail and consumer goods industries and now works with the Cloud & AI Industry Experiences team at Microsoft.
Sahir, welcome to the show.
Sahir Anand:
Thank you, David. Thanks for having me and nice to meet Jason and Paul.
David Starr:
Yeah. As we kick off here, Sahir, I'm going to ask you to talk about some of Microsoft's retail and consumer goods strategies. What do we have that we're really focusing on here at Microsoft?
Sahir Anand:
Thanks, David. Appreciate the question. In these excruciatingly difficult times that we are facing in terms of the pandemic, the retail industry is not absolved of its share of pains as well as successes, and meeting the customers’ rapidly exceeding expectations is something that we really go by when we talk to our retail customers, when we are talking to CPG companies globally, we really encourage a few different scenarios that we think are really important from a strategy perspective.
So let me start by talking a little bit about retail. I think, first and foremost, is really at the core of where the industry is at right now. Despite the pandemic, the ever-increasing demands from e-commerce, online, and then you think about brick and click, you really come down to a strategy which is knowing your customer inside out. 360-degree view of the customer, building the right customer loyalty strategies, and also, understanding where customer demand is going to flow from. When you address that customer demand, how do you truly build that relationship with the customer? So it's not just about the short-term, but it's really looking at the horizon and making sure that the brands are still connected and those that are going to lose out in close shop, they have to also think about where can they find a foothold. So knowing your customer is really key in retail.
Secondarily, the other important strategy is the other spectrum of where retailers have struggled over the years, but now they must focus even more, is really honing their skills as far as knowing their employees, empowering their employees and I think empowering of employees is just an overused term, but often not heeded to when it comes to actual investments. So if you still go into the stores, you're seeing labor rates, not at the levels where they need to be, labor strategies that are not where they need to be, the bright confluence between AI-based virtual assistants and physical assistants with the employees, making sure that the right number of employees are in the store in terms of their safety and their overall well-being in these pandemic times so, empowering employees with the right tools, the right capabilities is key.
The third is delivering an intelligent supply chain and empower an intelligent supply chain. Very hard to do in retail, just because there are so many touchpoints from the supplier supply chain to the DC, from the DC going further downstream and coming into the store, is the last mile. How do you really embed the right mix of AI, robotics, machine learning, and physical supply chain assets to build a very robust last-mile delivery strategy and also, the ability to BOPUS and curbside pickup, which is not easy to do in these times, especially during the holiday season when the likes of the large retailers like Target, Walmart, and others are per second number of orders within the hundreds of thousands, if not millions.
Then the last point I'll make is around imagining retail. Retail is one of those industries that has not been reimagined for tens of years. Sort of if you think about automated stores and intelligent stores, that sort of changed the gambit. So today, where retailers want to foresee where their business is headed, where their North Star is, and then that's really the key to understand okay, where's the mindshare? Where can we dive the customer's imagination next? So it's not just moving along with the customer, but it's also moving with the customer and making sure that you address their future needs. So that's what reimagining retail is all about.
So, that's where our strategy is in retail.
Paul Maher:
That's awesome to hear. Thanks so much. So just kind of replaying back what you've just said. Terrific set of thoughts. So kind of key priorities as we think from a Microsoft point of view in terms of opportunity, are things like knowing your customer, empowering your employees, delivering an intelligent supply chain, which of course, is probably now more important than other, and then reimagining retail.
So with that, Jason, I'd love to get your thoughts on what are you seeing, what are you hearing in the retail space, whether it's trends, cool technologies? Over to you!
Jason Goldberg:
Yeah. Thanks so much, Paul. Good stuff. What's been interesting and I guess, in hindsight, predictable about the pandemic has been that it's really accelerated a lot of retailers’ interest in transformation and digital solutions. So pre-pandemic, there were some categories that have been heavily digitally disrupted. If you were Blockbuster Video or Circuit City, you were disrupted by digital quite some time ago, but there are a lot of categories of retail that really hadn't been disrupted by digital.
Grocery was less than 3%, e-commerce, nobody was buying their automobiles online, for example. Healthcare had very low penetration of digital and then, of course, the pandemic hit and suddenly the only way to do business is digital. So suddenly, everyone wants to get their groceries through an online grocery shopping experience. Everyone wants to get their healthcare through telemedicine. Oddly, a bunch of people wanted to buy cars like, car sales are way up. Nobody's driving them, but they're all buying them and they wanted to buy them online instead of going into a dealership.
So a lot of my peers that are like a VP of e-commerce or a Chief Digital Officer, the C-suite may have paid lip service to that being a really important role in the retail organization. But honestly, they didn't have a lot of power. The joke is that they were told how important they would be and that was the last time they saw the CEO was the day they were hired and now that we're in the midst of this pandemic, the CEO is sitting in their office every day like, they've moved in and suddenly digital, super important and suddenly doing digital well is super important and achieving profitability in the digital channel is super important. And so, that's really changed kind of the prioritization of projects, the funding of initiatives, and the mindset of these retail organizations.
Paul Maher:
That's great, Jason and we talk a lot about this digital disruption and digital transformation and it's great to hear your thoughts. One thing, I'll just sort of would love to kind of throwback at you as well, especially in retail, obviously where price affinity is super important and keeping low margins and of course, now more than ever, as you've said, there's this discussion around how do we continue to further disrupt and innovate.
So what are you hearing or what are your thoughts on how to think about the strategy, where to make the investments with keeping in mind the need for these, keeping the price down and tight margin? So what are you seeing, how people are making kind of these decision-makings and it's almost like this dilemma of now more innovation being requested than the other, but of course, the other increasing demands, if you will, around price?
Jason Goldberg:
No, well, that's a great parameter because, in a lot of circumstances, profitability was not a requirement of these digital projects pre-pandemic. Everyone's like, “Oh, it's so early. We're just learning how to do it.” Like, “We'll figure out profitability later,” and now that the pandemic has accelerated, the role of digital in the shopping experiences, profitability is very important.
To give you a tangible example, you think about a giant retailer like Walmart. Last year, they sold over $20 billion online and by numerous public accounts, they lost several billion dollars on those sales. The whole business wasn't profitable and probably, one of the least profitable components of that business was digital grocery. Because when a customer orders groceries online and has them delivered to their house, Walmart has to pay someone to go get all those bananas off the shelf and they have to pay someone to drive the bananas to the house and as we've seen time and time again, everyone loves a free, fast delivery, but they don't want to pay for it. So the cost for digital grocery are much higher than traditional grocery.
In the old world, it's like, “Hey, we're learning how customers want to shop. We're learning how to do all these things. The fact that this isn't very profitable right now is not a major concern.” But this year, Walmart will sell over $40 billion online, the number of people that will pivot to primarily getting their groceries via digital will more than double and suddenly, it's very critical path to Walmart that they deliver all of this demand profitably and so, that changes some of your prioritizations. A big one is, you probably can't afford to pay human beings to run around the store finding bananas.
So one technology that really helps with the reduction in picking costs is this thing called the micro-fulfillment center so it's almost like an e-commerce automated fulfillment center that sits in the back of a grocery store, or in Walmart’s case, in the parking lot of a grocery store and automates the picking. Instead of driving those groceries to the consumer's home, which is very expensive and for most of the country, somewhat problematic because you've got perishables in that bag and no one at home to receive them and put them in the fridge. Retailers are really leaning into curbside pickup and these same-day fulfillment models; customers are finding that they really like them and they're more economical for the retailer to deliver, but to do them well requires a lot of new technical infrastructure on the part of the retailer.
So those would be some examples of maybe things retailers weren't over-investing in pre-pandemic that had moved way up to the front of the list, both to improve the digital experience for the customer, but at the same time, to make the unit economics more favorable for the retailer per your point, Paul.
Paul Maher:
Yeah, that makes a ton of sense.
Sahir, maybe anything to add from your side from what you're seeing pastorally, or perhaps some of the work Microsoft is doing?
Sahir Anand:
Yeah, absolutely. I think a lot of the points that Jason just alluded on make a lot of sense from a retail standpoint. I think where I think it's really important to think about is right now in retail, about 80% increase in e-commerce transactions is being seen across most major retailers. So as a whole, as an average, that's the type of increase we're talking about. Also, the share of e-commerce in retail has shot up dramatically—it's hovering around 16% of overall transactions. That changes the influence of everything and so if you think about the flavor of Omnichannel that's gotten a lot more prominent.
The other couple of points I'll make is that e-commerce merchandising, especially when you think about the increase in e-commerce orders and transactions, has meant that return rates have, in fact, doubled compared to in-store. So that puts a lot of pressure on e-commerce companies to maintain their profitability so they seek to reduce the losses per order or to increase their profitability per order. If you look at industry research, the typical e-commerce order, you see about 18 cents to a dollar in terms of the bare minimum that e-commerce companies need to make—the rest is all cost—and that number can go up to 30 cents to a dollar. Now, the pressure is even more because the returns have increased.
The other point which I'll make is this changes the game in retail, quite a bit now in the next six to 12 months and if you think about interesting technologies or trends, one of the trends to look at is the digital ad spend and how much digital ads are impacting the shopping behavior not just on digital channels, but overall. The expected spend in the next couple of years—and it's going to be, I think more than a couple of years—$330 billion expected digital global spends on ad and related content is pretty phenomenal in terms of the influence that you're going to see in how the consumer shopping behavior is going to change and how you can actually impact that change through rapid changes in pricing and promotions and digital content. So that will change the flavor of retail. It definitely will bring in more newer retail concepts. It will change the way people think about shopping. It will change the way pricing and promotions and markdowns are executed.
So that's sort of my take on where there are some interesting trends in retail right now.
Paul Maher:
That's great. Thanks, Sahir.
Here's talking a lot about big business and or big retailers, I should say and it happens that a lot of industries, not just retail, are reporting something that Jason already touched on, which is an urgency to change their investment priorities. If you think about maybe they had a backlog, if you will, of places they were going to invest in their company. Specifically wondering about small businesses and how they're weathering the storm of changing those priorities and moving to an e-commerce platform. So what changes are you seeing, Jason regarding reprioritizing their investment plans and how they're weathering the storm?
Jason Goldberg:
Yeah. Well, it is tricky for small businesses because I have to be honest in general, the pandemic is less favorable to small business for a variety of reasons. The pandemic has shifted about $250 billion in consumer spending from independent retailers to major chains, which has real ramifications for our future.
But what, for sure, is happening is the expectations of the customer are being elevated for everyone. So as we've talked about for many years, when Amazon improves the expectation around fulfillment when they deliver in two days instead of two weeks or one day instead of two days or one hour, that really raises expectations for everyone else in the industry. In the same way, when everyone's learning how to shop for digital grocery and they're getting all of these digital amenities from Kroger and Walmart and Target, they expect them from everyone, including their independent grocer. And so, if you're a small business, the answer is probably not to hire a bunch of developers and try to compete with Walmart on a product development platform, you need to be squarely in the camp of buying capacity versus building it. So one piece of good news there is, it's never been easier or better to buy capacity.
This is going to sound slightly pandering, but the migration to the cloud has dramatically improved the capabilities and value of buying or renting technology for these small businesses. So in many ways, the SaaS-based multitenant e-commerce platforms that small businesses tend to gravitate to are a lot lower risk and higher performance than the big enterprise e-commerce platforms that the big retailers tend to custom implement. And so, there are ways in which a small business can have a sort of advantage by buying best in class cloud-based solutions, and developing those solutions is a lot cheaper and faster. So all of you technology vendors are doing an amazing job at increasing the pace of evolution and providing good business solutions out there for small and large businesses.
Paul Maher:
Thanks for that, Jason.
David Starr:
And now let's take a moment out to listen to this very important message.
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Paul Maher:
So, Jason, we've talked a little bit about the trends and Sahir listed the same. Let's get into some of the details around the technology and so, I'd love to hear some of your thoughts on what are some of the technical investments maybe that the technology retailers are making to change their business and their business models. You mentioned a little bit about cloud earlier on, perhaps you could talk a little bit more detail about the benefit that's bringing, but also just generally, what are we seeing and most importantly, for the listeners, I'm sure they are astutely listening to see what was successful and maybe what can they take away and learn and go potentially implement themselves?
Jason Goldberg:
Sure. So maybe I'll hit the cloud lightly and then move on to some newer stuff, not that the cloud isn't new. But the migration of commerce to the cloud versus sort of traditional on-prem solutions has really been a big unlock. In the old world, commerce was a destination, like you'd go to a cash register at a store to buy something and then even when e-commerce launched, you would go to a digital URL to buy something like, you went from driving to Target to going to target.com and that's where you did commerce. Increasingly, that's not where you do commerce.
So today, you have thousands of micro-moments throughout your day when you actually make and consummate purchase decisions. You may be in the car with your kids when you realize you don't have enough peanut butter for lunch and you might use your digital voice assistant to add peanut butter to your existing grocery shopping list. Or you may be in the line at the bank and be thumbing through your Instagram feed and see some cool shoes that you decided you want to buy.
All of these micro-moments and what that means is commerce can't be a place that's locked into a single sort of digital or physical destination. It has to be a ubiquitous service that can be syndicated to an ever-increasing number of touchpoints where consumers are going to make and consummate purchase decisions and so, the way to do that has commerce available as a service on the cloud that's easily accessible from all these new touchpoints. So when TikTok blows up in the US and people want a commerce enable that; if you've already deployed a commerce solution on the cloud, it's dramatically easier to extend that to your TikTok commerce, things like that. So one of the real tangible benefits of the cloud has been this ability to kind of ubiquitously publish commerce and that's going to be increasingly important moving forward.
But some other specific examples. Sahir had mentioned the slow pace of evolution in retail. So one terrific example of that is point-of-sale systems. The majority of point of sales systems run by big retailers in the United States of America are still running on a proprietary big iron and they're probably written in COBOL. So every time tax laws change, they're going to the old folks’ home and getting the COBOL programmers and picking them up and asking them to change the POS system and you say, “Wait, why is that? There's tons of new innovation and tons of great point of sale systems and have you guys seen Microsoft Dynamics AX and all?”
There have been all these evolutions, but very few retailers have adopted them and the reason is there's definitely technical progressions from what we've had. They actually don't offer some new customers experience that's a business imperative to the retailer. So when you say, “Hey, if we move off of this old NCR-based point of sale system to a new modern cloud-based point of sale system, how many more bananas are we going to sell and the usual unfortunate answer is no more bananas, right” The customer experience is going to be the same. Maybe our cost of ownership will be a little lower, maybe there'll be some peripheral benefits, but there hasn't been a business imperative to get off of that POS platform immediately.
But the pandemic has changed that. You think about purchases now and A, customers don't want to interact unnecessarily with other people so self-service has moved way up the priority list. A lot of retailers had tried and we're actually moving away from self-service checkout. Now, they're heavily leaning into self-service checkout, but what they need is contactless self-service checkout.
So you look at someone like Walmart, they're rolling out a new store design that has 30 full-time self-service checkout terminals. But you actually use your mobile phone as the interface with the point of sale system so you never have to touch a touchscreen, you never have to touch a payment terminal and that is a differentiated amenity that customers are seeking out right now. Like, “Wait a minute. If I go to Walmart, I won't have to stand in line because there's 30 things always open. I won't have to wait for an employee I won't have the risk of someone sneezing on me, and I won't have to touch anything scary or gross.” So that's a win and that would cause a retailer to invest in a new point of sale system.
Then increasingly, and maybe we'll talk about this, one of the big problems with the pandemic at the moment is, it's dramatically reducing how many people are even allowed to walk in our store and so increasingly if I'm going to be a successful retailer, I need to sell stuff to people that don't come to my store and the best place and way to do that is to sell stuff to people in the parking lot. So curbside pickup has become the most important play in retail for many retail categories and in order to do curbside pickup well, you need to move all that point of sale infrastructure from your nice cozy retail environment into the parking lot and so suddenly, it's wireless and it has to be secure and it's got to support contactless payment and oh, by the way, when you checked out in the store, you saw the gum while you were standing in line and made an impulse buy. So what kind of impulse buys can I put on that curbside pickup point of sale system to sell impulse items to you at the edge of your car, for example?
So all of these new things have become requirements that retailers are investing in and it is prompting significant technology investment—investment in moving to the cloud investment, improving point of sale, investment in improving the digital shelf, all of these.
Paul Maher:
Yeah, that's super helpful and by the way, as someone who spent many years leading engineering teams, building POS systems and head office systems, I hear you on the COBOL side.
Just on the POS theme, I was actually having a conversation, I’ve had it several times about I agree with you in terms of, it seems to be kind of the dinosaur that hasn’t innovated. And you mentioned things like Jason self-checkout, et cetera, been around for a long time and there's a proliferation of solutions of people trying to simplify things and self-checkouts and all this kind of good stuff, but there's always been some hindrances or blockers.
I'm curious, in your mind, kind of what are the one or two things that are potentially blockers or decisions that need to be made that help these things light up? So like, in my day when I was building POS solutions and automated till it was all around RFID. Hey, everything was RFID enabled, I could just pull up my cart and auto scan everything and away we go. But of course, there were rules and regulations around the price points and whether or not the RFID tag would continue its life outside of the store.
So from your perspective, Jason—I think there is some good innovation, but are there one or two sort of things that you still perceive as blockers or decisions or policy things that need to change to help innovation in this POS space or generally, in the retail space?
Jason Goldberg:
Yeah. I'll start by saying, I do think a lot of the impediments have been knocked down largely because of the pandemic. I do think there are lots of good arguments for and against self-service checkout before. But now, those arguments are mute; everyone needs self-service checkout. There wasn't a big focus on contactless before, but now that's mute. There's a huge focus on contactless.
So at the moment, the big impediments that still require somewhat of an unlock are these things are still meaningful investments like, the actual software side is now much less of an investment because these cloud-based solutions tend to be much more affordable than the on-prem ones where there's a lot less engineering requirements on the part of the customers, But they, for the most part, are going to require a whole new investment in hardware at the edge, like all these tablets and things like that and well, that investment probably pencils out for most retailers. Most retailers are super concerned and cautious about burning cash right now.
In addition to being in a pandemic, we are now also in a recession and one of the things we know about companies that best survive recessions is they're the ones with the most cash on hand like, they're the ones that have the most liquidity and preserve capital and so, in a way, there's a higher barrier to make investments right now than there might've been in other circumstances. So I would argue, these digital commerce investments are winning more than they used to at retail so you're way more likely to see funds for a new point of sale system or a new digital commerce amenity than you are funds to remodel a store right now. So they're winning in that regard, but there still is a high bar for making big bets at retail where everyone has a significant amount of economic uncertainty.
Paul Maher:
Yeah. Super helpful.
Then, Sahir, maybe just focusing still on the technology side. We've talked about sort of the opportunity, POS, self-checkout, et cetera. Maybe just to close off on this one, is there one or two areas around, from a technology perspective, where you see Microsoft is helping with some of this innovation?
Sahir Anand:
I think that where Microsoft is trying to help retailers to put in their investments and there's got to be a payoff, lower TCO, higher ROI is definitely in commerce. Within the store, it is in developing intelligent and automated stores. I think having more lean stores with more flexible point of service has always been our sort of go-to strategy, a go-to mantra, but what is important to think from a retailer's perspective is how do we make it easy for retailers to effectively and quickly deploy and get a return on investment in these tricky times?
So if you think about our investments in Dynamics so commerce, customer experience, marketing, data, and AI, those are I think, some very important areas of investments that retailers are making with Microsoft today as we speak and that includes Dynamics 365 for customer insights, Dynamics 365 for marketing, Dynamics 365 for commerce, which has been a big push in recent times being for commerce.
And of course, if you think in that vein, what Microsoft does is nearly not as enough, or perhaps never going to be a complete picture from just Microsoft's perspective, unless it was for our partners. So if you think about partner platforms that are contributing to building a more compelling commerce story, a unified commerce, everywhere commerce, and within and outside the store, then partner platforms like for instance, Blue Yonder, Imparity, Adobe. Sitecore, Episerver, and likes of NCR, all these different partners are playing a very important role and the Microsoft story is never complete without its partners. That's what builds the platform, that's what drives the platform, the engine in retail every day. So that's what I would say to that.
Paul Maher:
That's great.
We touched upon it a little earlier on, I'm curious about your thoughts, Jason and Sahir, on things like last mile home delivery. Of course, with the current pandemic now more relevant than ever and obviously, the need to further evolve existing systems and processes in this space so there are many new approaches to delivery of products, for sure. But what are some of the new delivery models and implication for retailers? What are your thoughts? Jason, maybe you can start.
Jason Goldberg:
Yeah. Well, that's another area where we used to not worry a ton about profitability and now, we're a lot more focused on it and one of the unfortunate facts in the US is that home delivery capacity and particularly through common carriers like UPS, FedEx and the Post Office is way more constrained than our demand. So before the pandemic, e-commerce was growing at like 15% a year. Now, e-commerce is growing at like 33% a year. The number of packages that UPS and FedEx can in a year is growing at 8% a year.
So even before the pandemic, we were having this significant constraint in terms of the ability to ship packages and that is going to come to a head this holiday. So a lot of consumers are going to try to buy things at the last minute via e-commerce, because they don't want to go to the store, and they're going to find that the store is not able to fulfill those because they've run out of capacity and so, this is a real problem. It's not going to be easily solved, but while it's happening, it has really dire economic consequences for the retailer.
If Federal Express can only deliver a certain number of packages and there's more demand for shipping than there is for delivery capacity. What the economists tell us is that when there's an increased demand and a limited supply, that the price goes up and that's exactly what's happening like, there's huge surge prices right now on holiday delivery and so, a couple of things have to happen.
Retailers need to develop their own delivery capacity outside of those common carriers. Amazon has wildly done that; they're delivering something like 70% of their own packages right now. But another great example of a retailer that's doing that is Target. Target delivered 95% of all their e-commerce orders from a store last quarter and they own their own last-mile delivery service that does either curbside pickup or home delivery shipped that they get to use instead of those common carriers, or even if they ship it because they're shipping it from a store that's five miles from the customer, they get to ship it via the US Post Office and take advantage of extra capacity that wouldn't be available with FedEx or UPS.
So the big thing that's happening here is you have to get a lot smarter about how you deliver those products to the home. You can't rely on one carrier and one flavor of shipping. Increasingly, you need to do some real-time arbitrage of all the different ways you could deliver that product to that customer, and increasingly, we're using artificial intelligence to make those game-time decisions to optimize delivery channels for each thing. And then, of course, a big part of the problem is, you still have to get customers to go to the store and pick stuff up like, there just isn't enough capacity to deliver everything to home in the near term so, part of digital commerce has to be curbside pickup and same-day services.
David Starr:
So I'd like to mention, just as an example of that. I have a motorcycle, I'm really into motorcycling. I bought something from a local store recently and the way I received it was I went over to the store and never got out of my car. Someone came out in the parking lot. I told them, “Oh, this is my order.” They went back in the store, brought it out in the box, and charged me right there using a tablet to conduct the transaction and I'm wondering if we're seeing more of that. I mean, we used to see that at food trucks, at events and stuff, but more vendors or more retailers or larger stores are doing things like that with their point of sale systems. You're talking about last delivery. Oftentimes, it's not necessarily just at the home, right?
Jason Goldberg:
Oh, a hundred percent. I mean, that is probably the most common format going forward. There were $9 billion of extra digital grocery sales last quarter and almost all of it was that experience you just described. It's a car driving up to a parking lot and a point of sale system that geo-fence that customer and got notified when that customer was driving into the parking lot and they went and prepped in order and when the customer pulled up, they put that order in the customer's trunk. That customer never had to get out of the car and they drove that home and customers tell us that that's the highest NPS score shopping experience that they've ever had. So customers love it, it's convenient, it makes it more economical for the retail, and it doesn't have these capacity constraints that we have around home delivery.
Paul Maher:
Well, thank you, both Jason and Sahir. It's been great to have you on the show. Just a few calls-to-action. Jason, how can the listeners learn more about you and the work and of course, we'll share links in the show notes. So Jason, anything to share?
Jason Goldberg:
Yeah. So I'm wildly overexposed on the internet. I'm pretty easy to find. I use the “retail geek” moniker everywhere. So my Twitter handle is @retailgeek. I have a blog at retailgeek.com, which is a pretty central place to get started. Of course, in my day job, I work for the Publicis group so you're always welcome to visit our website there. And then you were kind enough in the beginning to mention the podcast, that's the Jason & Scot Show, Scot with one T, and we talk about this kind of stuff every week. We've got 250 episodes out there.
Paul Maher:
That’s awesome.
And Sahir, from your side, how can the listeners learn more?
Sahir Anand:
Yeah. if you go to the retail and consumer goods homepage at microsoft.com, you will find out industry page, which has got a lot of interesting data and soundbites captured within different industry blogs.
We've got playbooks. I believe we put together a really interesting COVID playbook for retailers recently that I came across, which I found to be very informative. There are interviews and there's quotes by our CEO, Satya Nadella, as well as the CVP of Retail, Shelley Bransten. Where you'll find a lot of these anecdotes and quotes from different customers mixed in with our executives to really highlight the pains of what retailers are facing today and how we are trying to help them to those pain points and really uncover new areas of growth and revenue management and customer-centricity, as well as building new journeys and new bridges to get retailers to the next level.
We also have some social handles not just for some eBooks that we put out for retail trends that you can find, but also my own social handle on LinkedIn, where I put out a lot of these different articles and blogs around retail as well as on Twitter. So please visit these different sites and happy to connect with you anytime to talk about retail and CPG.
Paul Maher:
Excellent. Thank you both. Well, we will certainly share all of these links in the show notes so thank you for that and all that remains on behalf of David and myself is, Jason and Sahir, thank you so much for being on the show. What an incredible conversation we've had and really enjoyed our time here together today and thank you so much.
Jason Goldberg:
It was a real pleasure. Thanks very much, everyone. Be safe and well.
Sahir Anand:
Thank you, David. Thank you, Paul. Thank you, Jason.
Paul Maher:
Thank you, both. Bye, bye!
David Starr:
Thank you for joining us for this episode of the Azure for Industry podcast, the show that explores how industry experts are transforming our world with Azure. For show notes, topic recommendations, or other feedback, reach out to us at industrypodcastatmicrosoft.com.